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Banking regulators are aiming to hand over the operations of the failed Ishikawa Bank to five local lenders, sources said Saturday.

Among the five is Hokkoku Bank, which rescinded its initial refusal to join the takeover plan.

Not being considered is a U.S. fund that has shown interest in the failed bank.

The government-backed Bridge Bank of Japan is currently administering the banking operations, assets and liabilities of the failed second-tier regional bank, which declared its insolvency Dec. 28.

The four other lenders considering taking over operations and branches are Hokuriku Bank, First Bank of Toyama, Kanazawa Shinkin Bank and Noto Shinkin Bank, according to the sources.

Banking regulators want to complete the necessary transfer transactions by the end of the current fiscal year — March 31, 2003 — the sources said.

Bridge Bank of Japan, based in Tokyo, signed a contract with state-appointed administrators of the failed bank to take over its operations plus assets and liabilities in late March.

In May, Hokkoku Bank refused a request by the Ishikawa Prefectural Government to take over the lender, but has since changed its mind.

On June 24, U.S. investment fund Metropolitan Mortgage & Securities Co. expressed willingness to take over Ishikawa Bank. It was the firm’s first attempt to enter Japan’s financial market.

The fund, headquartered in the state of Washington, had notified Deposit Insurance Corp. of its desire to take over all Ishikawa Bank operations.

Japanese banking regulators have placed priority on finding Japanese operators.

Ishikawa Bank had developed a negative net worth of 22.8 billion yen as of last Sept. 30.

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